Thursday, February 5, 2015

So you thought that the attorney-client relationship is a fiduciary relationship, right? Not in Delaware, apparently!

Raise your hand if you think the attorney client relationship is a fiduciary relationship.  Wait, not all hands are up?  How come?  Yesterday, a judge of the Delaware Superior Court for Sussex County issued an opinion in a civil case which concludes the notion of a fiduciary relationship is not what we have always been told.  The case is called Dickerson v. Murray and you can read the opinion here.

In this case, the plaintiffs hired a lawyer to represent them in a transaction.  Then, according to the plaintiffs, they suffered an injury as a result of the fact that the lawyer had a conflict of interest.  They sued for malpractice, but the complaint included a separate count for "conflict of interest." The judge found that the plaintiffs could support the cause of action for negligence, but dismissed the other cause of action.

The court dismissed the second count of the complaint because, according to the judge, “merely establishing an attorney-client relationship does not de facto give rise to fiduciary duties.”

That is news to me!

Pick any Professional Responsibility book and somewhere in it you will find an explanation of the basic principles of the attorney-client relationship.  And somewhere within that explanation you will find a statement that, in one way or another, defines that relationship as a fiduciary relationship.  Take for example Gillers, Regulation of the Legal Profession, page 2: "The lawyer's relationship to the client is fiduciary..." or Rotunda & Dzienkowski, Professional Responsibility, A Student's Guide, page 42:  "Lawyers are fiduciaries of their clients" and "[m]uch of the law of ethics is derived from, or related to, the law of fiduciaries." (emphasis in the original).

Yet, incredibly, the judge in this case concluded that “[a]n attorney must act in some capacity beyond the mere provision of legal services to owe actionable fiduciary duties” and the plaintiff “failed to allege factual contentions sufficient to prove the existence of a special trust, or relationship to substantiate a breach of fiduciary duty claim.”

The only factual allegation the plaintiff needs to allege to support the claim is that the defendant was the plaintiff’s lawyer, period.  The attorney-client relationship is, by definition, one based on special trust.  Again, citing Rotunda & Dzienkowski, "Clients have every right to expect trust from their lawyers, who are expected to act for the benefit of their principals, their clients."

The second count of the complaint was obviously argued poorly by calling it simply "conflict of interest" instead of arguing it as a separate claim for breach of fiduciary duty, but the court understood the allegation as such.  Thus, the problem is not that the judge did not understand the claim; the problem is that the judge does not understand the law.

As the court put it, "[i]n order to prevail on a breach of fiduciary duty action, unlike a negligence claim, Plaintiff must demonstrate the attorney-client relationship between the Defendants and Plaintiff was fiduciary in nature."  Yet, as any second year law student knows, a plaintiff does not have to "demonstrate" this.  It just is. 

Thanks to the Legal Profession blog for the link.

1 comment:

  1. I disagree. The transaction in this case is mundane and happens every day. Because of that and the highly demanding standards of fiduciary duties, it would be unfair to categorize the lawyer as a fiduciary.